WASHINGTON U.S. factory activity rose sharply in June to its highest level in almost three years suggesting economic growth in the second quarter gained some steam, while construction spending held steady in May.

The Institute for Supply Management (ISM) said on Monday its index of national factory activity rose to a reading of 57.8 last month, its best performance since August 2014, from 54.9 in May.

A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for roughly 12 percent of the overall U.S. economy.

“The ISM index provides further evidence that the prospects for the manufacturing sector remain bright,” said Andrew Hunter, an economist at Capital Economics.

The reading adds to encouraging signs that the U.S. economy rebounded strongly in the April-June quarter. Following the data, the Atlanta Federal Reserve raised its forecast for second-quarter GDP to a 3.0 percent annualized rate from its previous forecast of 2.7 percent.

On Friday, the Commerce Department also reported that the U.S. economy grew at a 1.4 percent annual rate in the first quarter, less slowly than previously estimated.

The ISM survey’s new orders sub-index rose to 63.5 in June from 59.5 the prior month. A measure of factory employment increased to a reading of 57.2 from 53.5 in May.

According to ISM, comments from those surveyed generally reflected expanding conditions, “with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace.” Fifteen of the 18 manufacturing industries reported growth in June.

Another survey released on Monday, the Markit Manufacturing Purchasing Managers’ Index, gave its lowest reading since last September

The dollar rose to a session high against a basket of currencies after the ISM data, while the yield on the 2-year U.S. Treasury note rose to a more than eight-year high. The Dow Jones Industrial Average hit a record high.

CONSTRUCTION SPENDING MIXED

Meanwhile, U.S. construction spending unexpectedly remained flat in May but federal government outlays on construction projects were the highest in more than four years.

The Commerce Department said on Monday that construction spending in May remained unchanged at $1.23 trillion. Spending in April was revised to show it declining 0.7 percent after a previously reported 1.4 percent fall.